Manchester United chief executive David Gill insists the club can still compete with big-spending neighbours Manchester City despite being overtaken in the pay league.

City's wage bill of £133million has rocketed up £50million in the last year, overtaking United's £131.7million and the Eastlands club, bankrolled by Sheikh Mansour, are closing in fast on Chelsea.

United agreed a bumper new deal with Wayne Rooney last week but are still maintaining their policy of ensuring wages remain less than half their turnover.

Asked if he was concerned that United were now behind Manchester City in the wages league, Gill told Press Association Sport: "No not really - I'm not concerned by that as ever since we have been a public company we have had a policy that wages should be 50% or less of turnover.

"We believe we can do that and still retain and attract the stars we need on the pitch. We think that's the sensible model.

"Clubs have other models - that's their prerogative. Each to their own."

United have managed to match Chelsea on the pitch in terms of silverware since Roman Abramovich took over at Stamford Bridge.

Gill added: "That's exactly right - we have remained competitive."

United's latest financial figures earlier this month revealed that the club's wage bill is £131.7m. Chelsea's is £142m, City's £133.3m and Arsenal are fourth with £110m spent annually on salaries.

United's total wages are 46% of turnover - the lowest ratio among Premier League clubs, Arsenal have the next lowest ratio on 49% while City spend more on wages than their total revenue.

The healthy wages-turnover ratio is one of the reasons that United are confident that they will meet UEFA's financial fair play rules despite the sums they have to pay out in interest to service the loans taken out by the Glazer family when they bought the club in 2005.